What changed
The all-in-cost ceiling for ECB, originally specified in a March 2012 circular, was set to expire. RBI has now decided to continue the same ceiling until June 30, 2014, after which it will be reviewed again. No other aspects of ECB policy have been altered.
What it means for you
Banks and borrowers can continue using the existing all-in-cost limits for ECB without any immediate change, providing stability for ongoing and planned borrowings. The extension gives lenders and corporates certainty until mid-2014, but they should watch for a potential review after that date. No new compliance or reporting requirements are introduced.
What you must do
- Inform customers and constituents about the continued applicability of the existing all-in-cost ceiling until June 30, 2014.
- Ensure all ECB transactions comply with the unchanged all-in-cost limits as per the March 2012 circular.
- Monitor RBI announcements for any review after June 30, 2014, to adjust lending practices accordingly.
Who it affects
AD Category-I banks, Borrowers using External Commercial Borrowings, Corporate treasuries and finance teams
What is the all-in-cost ceiling for ECB that remains unchanged?
The ceiling is the same as specified in the March 30, 2012 circular. The circular does not provide the specific rate, but it refers to that earlier directive. Banks should refer to that circular for exact figures.
Does this circular change any other ECB rules?
No. All other aspects of ECB policy remain unchanged. Only the all-in-cost ceiling has been extended until June 30, 2014.
What should AD Category-I banks do now?
Banks must bring the circular's contents to the notice of their constituents and customers. They should continue to apply the existing all-in-cost ceiling until further notice.